Action of the School Board Action of the School Board 05/26/15 | Page 5

2015-16 based on the funding levels found in the education budget recently approved by
the Minnesota Legislature but vetoed by Gov. Mark Dayton. Vargas acknowledged it’s possible funding levels could shift if the education budget is changed in a special legislative
session.
Total budgeted revenue will increase about $9.1 million to approximately $452 million. Expenditures are expected to increase $15.4 million to $459.2 million, resulting in an operating
deficit of about $7 million and an unassigned fund balance of $38.1 million, or 8.3 percent
of expenditures. The district has a goal of maintaining a fund balance of at least 5 percent
and the Government Finance Officers Association recommends a fund balance of 5 to 15
percent so the projected balance is well within guidelines.
On the revenue side, the proposed General Fund budget includes an $87 per pupil general
education increase to $5,918 per pupil unit, which results in an increase of $3.5 million
in general education revenue. The general education revenue figures reflect a projected
decline of 98 students. Other major increases in general fund revenue include an increase in
the alternative facilities levy of $3.7 million and a $1.9 million increase to the lease levy.
Alternatively, Vargas said the district is slated to lose $3.2 million in state revenue due to
the discontinuation of the compensatory education pilot grant by the legislature in the most
recent education bill.
As for expenditures, the budget is based on maintaining instructional staffing ratios and
special education caseloads at current levels. It includes assumptions of a 2.5 percent
increase in salaries for previously negotiated contacts, an estimated 2.5 percent increase
for Social Security and pensions, and $60,000 for Public Employee Retirement Association
(PERA) benefits, which is mandated by law. Health insurance premiums are budgeted to
remain flat. Utility costs and property and liability insurance are expected to increase by 3
percent and transportation will increase at an estimated 4 percent based on an increase in
the consumer price index.
The price of school meals will be going up 10 cents under the proposed Food Service budget, which has $19.4 million in revenue and $19.8 in expenditures and an anticipated fund
balance of $3.8 million. The budget includes a 9.9 percent projected increase in food costs.
The Community Service Fund shows projected revenue of approximately $19.8 million and
expenditures of $20.1 million with a restricted fund balance of $3.8 million. The budget
includes a $525,000 increase in revenues from Adventures Plus fees due to increased enrollment.
The Capital Projects Fund consists of money transferred from the General Fund to pay for
building improvements. Revenues and expenditures will be balanced at $12.4 million each.
Budgeted revenue and expenditures will increase by $3.7 million. The revenue and expenditure increase is the result of approved projects prioritized in the district’s 10-year plan,
including $7.8 million in ventilation upgrades at seven sites and a new roof at the Educational Service Center.
The Debt Service Fund is used for paying principal and interest on bonded debt for school
construction. Revenues for this fund will be nearly balanced as well, with about $10.6
million in each and an operating surplus of $1 million, which will go to a reserved fund
balance of $3.5 million.
Revenue will remain stable at $1.2 million and expenditures will drop a bit to $1.3 million
in the Trust Fund, which is used for managing scholarships and the Other Post Employment Benefits (OPEB) trust fund managed by Wells Fargo. The reserved fund balance is
expected to be approximately $35.3 million.

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ACTION

Total revenues for all funds combined are expected to be $515.7 million and expenditures,
$524.6 million. Board action on the budget is scheduled for June 22.